News Releases

WestJet Reports Record Third Quarter and Year-To-Date Results

Airline continues its positive momentum with a 44% increase in net
earnings

CALGARY, Nov. 7 /CNW/ - WestJet (TSX:WJA) today announced record third
quarter net earnings of $76.1 million, a 44.0% increase over the $52.8 million
for the same period last year. Record year-to-date net earnings of
$117.5 million were 33.5% higher than $88.0 million in 2006.
The airline's third quarter earnings from operations were $144.2 million.
This represented an operating margin of 23.5% and an increase of 60.6% over
2006.
Sean Durfy, WestJet President and CEO said today, "These results
demonstrate another quarter of hard work by our people and their ability to
continue the positive momentum of our airline. The strength of the Canadian
economy and the strong demand for our product, evidenced by our highest load
factor in history, achieved in August, allowed us to deliver our strongest
third quarter results on record. Our people met the demands of higher loads
with on-time performance that was among the top three in North America."
WestJet's diluted earnings per share (EPS) for the third quarter was
58 cents compared to 41 cents in the same period last year, an increase of
41.5%. Year to date, diluted EPS was 90 cents, an increase of 32.4% compared
to 68 cents in 2006. Excluding the second quarter reservation system
write-down of $31.9 million, year-to-date diluted EPS was $1.07, or a 57.4%
increase when compared to the same period in 2006.
Third quarter revenue of $614.1 million compared to $502.3 million in the
third quarter of 2006 was an improvement of 22.3%. Year to date, revenue
increased to $1.6 billion compared to $1.3 billion in 2006, an increase of
21.7%.

<<
Operating Highlights
-------------------------------------------------------------------------
Q3 Q3 % YTD YTD %
2007 2006 change 2007 2006 change
-------------------------------------------------------------------------
Load Factor 83.2% 80.5% 2.7 pts. 81.8% 79.2% 2.6 pts.
-------------------------------------------------------------------------
ASM (available seat
miles) billions 3.8 3.3 14.4% 10.7 9.2 16.5%
-------------------------------------------------------------------------
RPM (revenue passenger
miles) billions 3.2 2.7 18.3% 8.8 7.3 20.3%
-------------------------------------------------------------------------
RASM (revenue per
available seat mile)
cents 16.2 15.2 6.6% 14.9 14.3 4.2%
-------------------------------------------------------------------------
Yield (revenue per
passenger mile) cents 19.5 18.9 3.2% 18.2 18.0 1.1%
-------------------------------------------------------------------------
CASM (cost per available
seat mile) cents 12.4 12.5 (0.6%) 12.5(1) 12.6 (0.9%)
-------------------------------------------------------------------------
CASM excluding fuel cents 8.9 8.9 - 9.1(1) 9.1 -
-------------------------------------------------------------------------
(1) excludes reservation system write-down of $31.9 million
-------------------------------------------------------------------------
>>

Sean Durfy continued, "In the third quarter, we flew a record number of
guests, with an 83.2% load factor, achieved a 3.2% increase in our yield, and
did so while adding 14.4% more capacity over the same period last year. Our
continuing effort to build our commercial and leisure network and increase
load factor, while effectively managing yield during this traditionally strong
demand period, contributed to year-over-year increases in RASM of 6.6%. We are
particularly pleased with our improved RASM, which is a key indicator of an
airline's financial success.
"We look at all areas of our business in the most cost-conscious manner,
keeping our commitment to maintaining the lowest sustainable CASM, while
providing a great guest experience. CASM for the quarter was down slightly
from the previous year, even with our continued expansion and growth.
Increased utilization of 2.5% to 12.2 hours helped maintain CASM this quarter
by diluting our costs across a wider asset base.
"In the fourth quarter we will add two more 737-700 series aircraft,
bringing our fleet size to 70 by year end. We will increase our capacity by
over 14% compared to the fourth quarter of 2006. Yesterday, our Board of
Directors signed an agreement for two more leased aircraft to be received in
November 2008 and January 2009. This decision is based on the continued
foreseeable success in our market penetration. These aircraft will bring our
2008 and 2009 ASM growth to 16% and 8% respectively. This brings our firm
deliveries to 46 additional aircraft between 2008 and 2013 and our fleet size
to 116 Boeing Next-Generation aircraft by the end of 2013. We will continue to
benefit from operating a modern fleet of fuel-efficient aircraft in the face
of rising fuel prices.
"We are heading into the fourth quarter with the strong foundation of the
last nine months behind us. Our people are dedicated and committed to going
above and beyond when it comes to delivering the best experience to our
guests. Our success over the last quarter and the last 11 years is testament
to this fact; a sincere thanks to our over 6,500 WestJetters for once again
delivering such great results."

<<
WestJet also reported third quarter and year-to-date operational
performance.

-------------------------------------------------------------------------
Q3 Q3 % YTD YTD %
2007 2006 change 2007 2006 change
-------------------------------------------------------------------------
On-time performance 87.4% 87.8% (0.4 pts.) 84.2% 82.5% 1.7 pts.
-------------------------------------------------------------------------
Completion rate 99.7% 99.7% - 99.2% 99.5% (0.3 pts.)
-------------------------------------------------------------------------
Bag ratio 4.02 4.47 10.1% 4.25 4.69 9.4%
-------------------------------------------------------------------------
>>

THIRD QUARTER 2007 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
RESULTS

FORWARD-LOOKING INFORMATION

Certain information set forth in this document, including management's
assessment of WestJet's future plans and operations, contains forward-looking
statements. These forward looking statements typically contain the words
"anticipate", "believe", "estimate", "intend", "expect", "may", "will",
"should" or other similar terms. By their nature, forward-looking statements
are subject to numerous risks and uncertainties, some of which are beyond
WestJet's control, including the impact of general economic conditions,
changing domestic and international industry conditions, volatility of fuel
prices, terrorism, currency fluctuations, interest rates, competition from
other industry participants (including new entrants, and generally as to
capacity fluctuations and pricing environment), labour matters, government
regulation, stock-market volatility and the ability to access sufficient
capital from internal and external sources. Readers are cautioned that
management's expectations, estimates, projections and assumptions used in the
preparation of such information, although considered reasonable at the time of
preparation, may prove to be imprecise and, as such, undue reliance should not
be placed on forward-looking statements. WestJet's actual results, performance
or achievements could differ materially from those expressed in, or implied
by, these forward-looking statements.

Additional information relating to WestJet, including Annual Information
Forms and financial statements, is located on SEDAR at www.sedar.com.

To supplement its consolidated financial statements presented in
accordance with Canadian generally accepted accounting principles (GAAP), the
Company uses various non-GAAP performance measures, including ASM, CASM, RASM,
yield, operating revenues, operating margin and load factor as defined below.
These measures are provided to enhance the user's overall understanding of the
Company's current financial performance and are included to provide investors
and management with an alternative method for assessing the Company's
operating results in a manner that is focused on the performance of the
Company's ongoing operations and to provide a more consistent basis for
comparison between quarters. These measures are not in accordance with or an
alternative for GAAP and may be different from measures used by other
companies.

OPERATIONAL TERMS

Operating revenues: Total of guest revenues, charter and other revenues
and interest income.

Operating margin: Earnings from operations divided by total revenues.

ASMs - Available Seat Miles: Total passenger capacity (calculated by
multiplying the total number of seats available for sale by the total
distance flown).

RPMs - Revenue Passenger Miles: Passenger traffic (number of revenue
passengers multiplied by the total distance flown).

Load Factor: Total capacity utilization (proportion of total ASMs
occupied by revenue passengers).

Yield - Revenue per RPM: Unit yield (total revenue generated per RPM).

RASM - Revenue per ASM: Unit revenue (total revenue divided by ASMs).

CASM - Cost per ASM: Unit costs (operating expenses divided by ASMs).

Selected Quarterly Unaudited Financial Information

The table below sets forth selected data derived from our consolidated
financial statements for the eight previous quarters ended September 30, 2007.
This table has been prepared in accordance with Canadian GAAP and is reported
in Canadian dollars. This information should be read in conjunction with the
consolidated financial statements for the year ended December 31, 2006 and
related notes thereto.

<<
(IN MILLIONS OF DOLLARS EXCEPT PER SHARE DATA)

Three Months Ended
-------------------------------------------------------------------------
Sept. 30 June 30 Mar. 31 Dec. 31
2007 2007 2007 2006
-------------------------------------------------------------------------
Total revenues $ 614.1 $ 504.8 $ 479.2 $ 458.6
Net earnings $ 76.1 $ 11.5 $ 29.9 $ 26.7
Basic earnings per
share $ 0.59 $ 0.09 $ 0.23 $ 0.21
Diluted earnings per
share $ 0.58 $ 0.09 $ 0.23 $ 0.21
-------------------------------------------------------------------------
Three Months Ended
-------------------------------------------------------------------------
Sept. 30 June 30 Mar. 31 Dec. 31
2006 2006 2006 2005
-------------------------------------------------------------------------
Total revenues $ 502.3 $ 424.0 $ 386.7 $ 366.8
Net earnings $ 52.8 $ 22.4 $ 12.9 $ 1.0
Basic earnings per
share $ 0.41 $ 0.17 $ 0.10 $ 0.01
Diluted earnings per
share $ 0.41 $ 0.17 $ 0.10 $ 0.01
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>

Our business is seasonal in nature with varying levels of activity
throughout the year. We traditionally experience increased domestic travel in
the summer months and more demand for transborder and charter sun destinations
over the winter period. However, we have been able to alleviate the effects of
the seasonal demand by allocating our network capacity to the appropriate
market, based on demand in the season.
In the quarter ended June 30, 2007, the reported net earnings of
$11.5 million were negatively impacted by a non-cash write-down of $31.9
million ($22.2 million after tax or 17 cents per share) in capitalized costs
for the assets associated with WestJet's aiRES reservation system project.
In the quarter ended December 31, 2005, the reported net earnings of
$1.0 million were negatively impacted by elevated jet fuel prices caused by
that season's hurricanes.

HIGHLIGHTS

The three months ended September 30, 2007 represented the most successful
quarter in our history. We experienced record revenues, earnings from
operations, operating margins and net earnings while simultaneously reporting
record load factors. We improved our CASM and increased our RASM while
maintaining our exceptional level of guest service.
Net earnings in the third quarter of 2007 increased 44.0% to $76.1
million or $0.58 per share (diluted) from $52.8 million or $0.41 per share
(diluted) in the same quarter of 2006. For the first nine months of 2007, net
earnings rose 33.5% to $117.5 million or $0.90 per share (diluted) compared to
$88.0 million or $0.68 per share (diluted) for the same period in 2006.
Excluding the second quarter reservation system write-down of $31.9 million,
our earnings per share would have been $1.07 or a 57.4% increase for the
nine-month period ended September 30, 2007 when compared to the same period in
2006.
For the three months ended September 30, 2007, earnings from operations
were $144.2 million which represents a record quarterly operating margin of
23.5% and an increase of 60.6% over 2006. For the first nine months of 2007,
excluding the second quarter reservation system write-down, our earnings from
operations were $258.7 million which resulted in an operating margin of 16.2%.
These results represent the highest quarterly and nine-month earnings from
operations in our history. The growth in our earnings from operations was
driven primarily by record load factors, overall improvement in our RASM,
sustained cost control and the continued absorption of additional capacity by
the market.
For the quarter ended September 30, 2007, our revenue results continued
to show strong growth with an increase of 22.3% compared to the same quarter
in 2006. For the first nine months of 2007, our revenue increased by 21.7%
compared to the same period in 2006. Our capacity increased 14.4% and 16.5%,
respectively, over the prior year and our RPMs increased by 18.3% and 20.3%.
Our load factors were 83.2% and 81.8% for the three and nine months ended
September 30, 2007 and included our highest monthly load factor in our 11-year
history of 88.0% in August. We also experienced strong third quarter yield and
RASM figures at 19.5 cents and 16.2 cents respectively.

<<
Three Months Ended Sept. 30
-------------------------------------------------------------------------
increase/
2007 2006 (decrease)
-------------------------------------------------------------------------
ASMs 3,788,590,681 3,310,271,095 14.4%
RPMs 3,151,875,384 2,663,252,640 18.3%
Load factor 83.2% 80.5% 2.7
Yield (cents) 19.5 18.9 3.2%
RASM (cents) 16.2 15.2 6.6%
Cost per passenger mile (cents)(1) 14.9 15.5 (3.9%)
CASM (cents)(1) 12.4 12.5 (0.6%)
Fuel consumption (litres) 188,288,840 163,679,642 15.0%
Fuel costs/litre (cents) 69.6 72.8 (4.4%)
Segment guests 3,454,649 2,956,996 16.8%
Average stage length (miles) 862 850 1.4%
Number of full-time equivalent
employees at period end 5,598 4,903 14.2%
Fleet size at period end 68 62 9.7%
Aircraft available for use 68 62 9.7%
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Nine Months Ended Sept. 30
-------------------------------------------------------------------------
increase/
2007 2006 (decrease)
-------------------------------------------------------------------------
ASMs 10,726,124,233 9,209,620,042 16.5%
RPMs 8,771,417,696 7,289,503,110 20.3%
Load factor 81.8% 79.2% 2.6
Yield (cents) 18.2 18.0 1.1%
RASM (cents) 14.9 14.3 4.2%
Cost per passenger mile (cents)(1) 15.3 15.9 (3.8%)
CASM (cents)(1) 12.5 12.6 (0.9%)
Fuel consumption (litres) 533,669,908 452,357,964 18.0%
Fuel costs/litre (cents) 67.8 70.6 (4.0%)
Segment guests 9,724,384 8,278,592 17.5%
Average stage length (miles) 852 835 2.0%
Number of full-time equivalent
employees at period end 5,598 4,903 14.2%
Fleet size at period end 68 62 9.7%
Aircraft available for use 68 62 9.7%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Excludes reservation system write-down of $31.9 million in Q2 of 2007
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>

In the third quarter of 2007, WestJet introduced several initiatives
which both improved our exceptional guest service and helped with our
continued cost-containment efforts. In August, we became the first airline in
North America to introduce electronic boarding passes at all Canadian airports
and in September, we extended our web check-in capability for scheduled
flights to and from international and transborder destinations. We also
improved our web service by enabling an online change feature, allowing our
guests the ability to make their own changes to their bookings.

FLEET

In the three months ended September 30, 2007, we took delivery of an
additional three purchased aircraft which brought our total fleet to 68
aircraft.
On July 12, 2007, we signed a Letter of Intent to lease three aircraft in
2010 with options to lease three more aircraft in 2011. On July 31, 2007, we
announced an agreement to purchase 20 Boeing 737-700 aircraft with 14
scheduled for delivery in 2012 and six in 2013. On August 7, 2007, we signed
another Letter of Intent to lease three aircraft with two scheduled for
delivery in 2010 and one in 2011. The additional capacity is in line with our
strategic deliverables of continued commercialization of our domestic
schedule, an increase in scheduled routes into the U.S. and the introduction
of new routes into the Caribbean and Mexican markets. In total, at September
30, 2007, we had existing commitments to take delivery of an additional 43
Next-Generation aircraft as summarized below:

<<
-------------------------------------------------------------------------
Series
------------------------------------------------
600s 700s
------------------------------------------------
Leased Owned Total Leased Owned Total
-------------------------------------------------------------------------
Fleet at Sept. 30, 2007 - 13 13 15 34 49
Commitments:
Remainder of 2007 - - - 1 1 2
2008 - - - 2 3 5
2009 - - - 7 - 7
2010 - - - 4 - 4
2011 - - - 1 - 1
2012 - - - - 14(1) 14(1)
2013 - - - - 6(1) 6(1)
-------------------------------------------------------------------------
Total Commitments - - - 15 24 39
-------------------------------------------------------------------------
Committed fleet as of 2013 - 13 13 30 58 88
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) We have an option to convert any of these aircraft to 737-800s.

-------------------------------------------------------------------------
Series
------------------------------------------------
800s Total Fleet
------------------------------------------------
Leased Owned Total Leased Owned Total
-------------------------------------------------------------------------
Fleet at Sept. 30, 2007 5 1 6 20 48 68
Commitments:
Remainder of 2007 - - - 1 1 2
2008 1 - 1 3 3 6
2009 2 - 2 9 - 9
2010 1 - 1 5 - 5
2011 - - - 1 - 1
2012 - - - - 14 14
2013 - - - - 6 6
-------------------------------------------------------------------------
Total Commitments 4 - 4 19 24 43
-------------------------------------------------------------------------
Committed fleet as of 2013 9 1 10 39 72 111
-------------------------------------------------------------------------
-------------------------------------------------------------------------

On October 26, 2007, we exercised our options to lease three additional
737-700 aircraft in 2011 and on November 6, 2007, we signed a Letter of Intent
for two more 737-800 aircraft to be delivered in November 2008 and January
2009, which brings our future commitments to 48 aircraft and total committed
fleet to 116 by 2013.

REVENUES

Three Months Ended Sept. 30
-------------------------------------------------------------------------
increase/
($ in thousands) 2007 2006 (decrease)
-------------------------------------------------------------------------
Guest revenues $ 556,736 $ 453,342 22.8%
Charter and other 50,667 44,978 12.6%
Interest income 6,675 3,942 69.3%
-------------------------------------------------------------------------
$ 614,078 $ 502,262 22.3%
-------------------------------------------------------------------------
RASM (cents) 16.2 15.2 6.6%
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Nine Months Ended Sept. 30
-------------------------------------------------------------------------
increase/
($ in thousands) 2007 2006 (decrease)
-------------------------------------------------------------------------
Guest revenues $ 1,396,780 $ 1,146,228 21.9%
Charter and other 184,942 157,203 17.6%
Interest income 16,358 9,536 71.5%
-------------------------------------------------------------------------
$ 1,598,080 $ 1,312,967 21.7%
-------------------------------------------------------------------------
RASM (cents) 14.9 14.3 4.2%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>

The third quarter of 2007 was a record quarter with respect to revenue
driven by increased ASM capacity, load factor and yield. Our total guest
revenues increased by 22.8%, from $453.3 million to $556.7 million, on
capacity growth of 14.4% when compared to the third quarter of 2006. For the
nine months ended September 30, 2007, our guest revenues increased by 21.9%,
from $1.1 billion to $1.4 billion, on capacity growth of 16.5%. For the third
quarter and first nine months of 2007, our RASM increased by 6.6% and 4.2%
compared to the prior-year periods.
The third quarter is traditionally the busiest air travel period with
significant domestic traffic. To accommodate the increased domestic demand in
the summer months, we continued with our seasonal deployment strategy,
allocating over 90% of our capacity to domestic routes in the third quarter.
In the 2007 summer period, WestJet introduced new routes into
Kitchener-Waterloo, Saint John and Deer Lake. As evidenced by our record load
factors for the third quarter of 2007, the capacity was absorbed by the market
during this period and we were also able to grow yield from 18.9 cents to 19.5
cents or 3.2%.
For the three and nine months ended September 30, 2007, our load factors
averaged 83.2% and 81.8% which are both increases when compared to the
previous year's load factors of 80.5% and 79.2% respectively. As previously
mentioned, the load factor for the third quarter of 2007 represents our
highest quarterly load factor in our 11-year history. Our record load factor
demonstrates wide acceptance of WestJet's amazing guest experience, product
and brand. Results of our satisfaction surveys indicate that 90% of our guests
say they will fly with us again and will recommend our airline to others. As
previously stated, we believe the optimal load factor to be in the high 70%
and low 80% range and we anticipate our 2007 full-year load factor to be
approximately 80% to 81%.
Our charter and other revenues are up 12.6% and 17.6% in the three and
nine months ended September 30, 2007 compared to the prior year. This is due
mainly to a substantial increase in ancillary revenue including service fees
and incremental WestJet Vacations non-air revenue.

<<
COSTS

Three Months Ended Nine Months Ended
Sept. 30 Sept. 30
-------------------------------------------------------------------------
increase/ increase/
CASM (cents)(1) 2007 2006 (decrease) 2007 2006 (decrease)
-------------------------------------------------------------------------
Aircraft fuel 3.46 3.60 (3.9%) 3.37 3.47 (2.9%)
Airport operations 1.93 1.86 3.8% 2.06 1.99 3.5%
Flight operations and
navigational charges 1.76 1.88 (6.4%) 1.80 1.82 (1.1%)
Sales and marketing 1.34 1.32 1.5% 1.26 1.30 (3.1%)
Depreciation and
amortization 0.85 0.89 (4.5%) 0.88 0.88 -
General and
administration 0.78 0.56 39.3% 0.72 0.66 9.1%
Inflight 0.57 0.54 5.6% 0.58 0.53 9.4%
Interest expense 0.50 0.56 (10.7%) 0.52 0.55 (5.5%)
Aircraft leasing 0.49 0.53 (7.5%) 0.53 0.58 (8.6%)
Maintenance 0.49 0.47 4.3% 0.51 0.55 (7.3%)
Guest services 0.22 0.25 (12.0%) 0.24 0.25 (4.0%)
-------------------------------------------------------------------------
12.39 12.46 (0.6%) 12.47 12.58 (0.9%)
-------------------------------------------------------------------------
CASM, excluding fuel(1) 8.93 8.86 0.8% 9.10 9.11 (0.1%)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Excludes reservation system write-down of $31.9 million in Q2 2007
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>

In the three and nine months ended September 30, 2007, we were able to
grow our capacity by 14.4% and 16.5%, respectively, compared to the prior
periods. We did so while also achieving a slight reduction in our total cost
per ASM by 0.6% and 0.9% for these same periods, excluding the reservation
system write-down of $31.9 million in June 2007.
For the third quarter of 2007, the primary variances in unit costs came
from CASM decreases in fuel (0.14 cents or 3.9%), flight operations and
navigational charges (0.12 cents or 6.4%) and interest expense (0.06 cents or
10.7%). These decreases were partially offset by CASM increases in general and
administration expense (0.22 cents or 39.3%) and airport operations (0.07
cents or 3.8%).
For the first nine months of 2007, the most significant variances in unit
costs came from CASM decreases in fuel (0.10 cents or 2.9%), aircraft leasing
(0.05 cents or 8.6%), sales and marketing (0.04 cents or 3.1%) and maintenance
(0.04 cents or 7.3%), which were offset slightly by CASM increases in airport
operations (0.07 cents or 3.5%), general and administration expense
(0.06 cents or 9.1%) and inflight (0.05 cents or 9.4%).

FUEL

Fuel is a significant cost to WestJet, representing approximately 26% of
total operating expenses. In the third quarter of 2007, our fuel cost per ASM
decreased from 3.60 cents to 3.46 cents compared to the same quarter in 2006.
Despite a 7% increase in the market price of crude oil and the higher fuel
burn associated with our record load factors, our cost per ASM declined as
these increases were more than offset by the strengthening Canadian dollar and
a 1% drop in the crack spread (the difference between the price of crude oil
and refined products such as gasoline and jet fuel).
Year-to-date fuel cost per ASM decreased by 2.9% compared to 2006 due
mainly to the strengthening Canadian dollar and a 3% decrease in crude oil
pricing partially offset by a 14% increase in crack spreads as well as
increased fuel burn.
For 2007, we estimate our sensitivity to changes in crude oil and jet
fuel pricing to be approximately CAD $5 million annually for every US dollar
change per barrel of crude oil and CAD $7 million for every one-cent-per-litre
change in the price of jet fuel. We also estimate that every one-cent change
in the value of the Canadian dollar versus the US dollar to be an approximate
CAD $4 million impact to our annual fuel costs.
To help mitigate our exposure to fluctuations in jet fuel prices, we
periodically use short-term and long-term financial and physical derivatives
and account for these derivatives as cash flow hedges. As at September 30,
2007, we had no outstanding hedge contracts.

AIRPORT OPERATIONS

Airport operations expense consists primarily of airport landing and
terminal fees as well as ground handling and charter costs. These expenditures
typically fluctuate depending on destinations, aircraft weights and inclement
weather conditions. Transborder flights are more expensive than domestic
flights due to increased charges from domestic airports for higher terminal
and pre-clearance fees.
For the three months ended September 30, 2007, our cost per ASM for
airport operations increased by 3.8%. This was due mainly to an increase in
airport rates and fees as well as ground handling fees across our destination
network in addition to an increase in employee salary and benefits from the
continued tight labour market. We also increased our transborder departures,
as a percentage of overall departures, by 0.7 percentage points compared to
the third quarter in 2006.
For the first nine months of 2007, we showed a 3.5% increase in our
airport operations cost per ASM. This was due to airport rate increases as
well as changes to our destination mix, whereby transborder departures
increased as a percentage of overall departures by 2.7 percentage points
compared to the prior year.

FLIGHT OPERATIONS AND NAVIGATIONAL CHARGES

Flight operations and navigational charges consist mainly of pilot
salaries, benefits, training, stock-based compensation expense, salaries and
benefits for operations control centre staff and fees levied by NAV Canada
related to air traffic control.
For the third quarter of 2007, our flight operations and navigational
charge per ASM decreased by 6.4% from 1.88 cents to 1.76 cents. This is mainly
due to lower stock-based compensation expense as a result of the 2006 pilot
agreement as well as a decrease in the NAV Canada charges due to decreases in
rates in August 2007 and September 2006 and increased transborder traffic.
Year-to-date cost per ASM was 1.1% lower than the first nine months of
2006 due mainly to the timing of the change in total pilot compensation
agreements and the decreases in NAV Canada rates.

SALES AND MARKETING

Sales and marketing expenses consist mainly of travel agency commissions,
credit card fees and advertising. Our sales and marketing cost per ASM
increased by 1.5% to 1.34 cents due mainly to an increase in commission-based
sales tracing to increased revenue from WestJet Vacations. Sales and marketing
costs have also increased due to additional credit card fees as a result of
the continued growth in the associated ancillary revenue.
For the first nine months of 2007, our sales and marketing CASM decreased
by 3.1% to 1.26 cents compared to 1.30 cents in the prior year. Brand
recognition and awareness remains high. Year-to-date advertising and
promotional costs are relatively flat in dollar terms, thus enabling us to
achieve unit cost reductions with our increasing capacity.

DEPRECIATION AND AMORTIZATION

Our quarterly unit depreciation and amortization expense decreased by
0.04 cents or 4.5% mainly due to $1.4 million in amortization of transaction
costs in the third quarter of 2006. Starting January 1, 2007, per the new
Canadian Institute of Chartered Accountants (CICA) handbook section S.3855,
these costs are now classified as general and administration expense and are
expensed as incurred.
Our year-to-date depreciation and amortization cost per ASM remained
constant at 0.88 cents. This was mainly due to the change in accounting policy
related to $3.7 million in amortization of transaction costs now classified in
general and administration expense, as well as the dilutive impact from our
ASM growth, offset by one-time favourable adjustments recorded in the first
quarter of 2006 related to the disposals of the 737-200 capital leases. This
represented the final transition of our aircraft to a modernized,
higher-efficiency Next-Generation fleet.

GENERAL AND ADMINISTRATION

General and administration costs consist of our corporate office
departments, professional fees and insurance costs.
Our quarterly unit general and administration expense increased by 0.22
cents or 39.3% compared to the prior year due in part to $3.6 million of
transaction costs related to new aircraft purchased in the quarter, which
represented approximately half of the increase. In previous years, these costs
were capitalized as Other Assets and amortized over the life of the related
long-term debt as depreciation and amortization expense. The rest of the
variance relates primarily to salary increases from the one-time market wage
adjustment in May 2007, salaries being expensed in 2007 that were previously
capitalized in 2006 as part of the aiRES project, increased rental costs
resulting from our growth and cost transfers from other line items.
On a year-to-date basis, our general and administration unit costs
increased by 9.1% due to $4.1 million in transaction costs related to new
aircraft purchased and leased this year, increased salary expenses, increased
rental costs and line item transfers.

INFLIGHT

Our inflight expense consists mainly of flight attendant salaries,
benefits, travel costs and training. Our inflight CASM increased by 5.6% and
9.4% for the three and nine months ended September 30, 2007, respectively,
compared to the prior year. These increases are mainly due to a one-time
market wage adjustment on May 1, 2007, increased hotel rates as well as higher
training costs due to a change in training compensation philosophy in May 2006
whereby we are now paying for a greater proportion of initial and recurrent
annual training.

AIRCRAFT LEASING

In February and late March of this year, we added two new leased 737-700
aircraft to our fleet. We now lease a total of 20 Next-Generation aircraft,
representing 29.4% of our total fleet.
Aircraft leasing costs per ASM decreased by 7.5% and 8.6% in the three
and nine months ended September 30, 2007, respectively, as a result of the
dilution of increased costs over a greater number of seat miles from our 14.4%
and 16.5% growth as well as the strengthening Canadian dollar. This was
partially offset by incremental lease costs on the two new 737-700 aircraft
leased earlier this year.

MAINTENANCE

Our unit maintenance cost of 0.49 cents for the third quarter of 2007 was
4.3% higher than in 2006 due mainly to an increase in the number of aircraft
out of warranty. At September 30, 2006, eight out of 62 aircraft in our fleet
were out of warranty and at September 30, 2007, 23 out of 68 aircraft were out
of warranty. The impact of this on our unit cost is mitigated by the
strengthening Canadian dollar as well as the dilutive effect of our 14.4%
capacity growth quarter over quarter.
For the nine months ended September 30, 2007, our unit maintenance cost
of 0.51 cents was 7.3% lower than the first nine months of 2006 due mainly to
$4.6 million in incremental maintenance costs incurred in early 2006 related
to the purchase and sale of the remaining 737-200 aircraft.

GUEST SERVICES

Guest services expense consists mainly of our reservations Sales Super
Centre and Guest Relations teams. Our quarterly unit guest services expense
decreased by 0.03 cents or 12.0% compared to the prior year mainly due to
efforts to control costs while enhancing our guests' experience. This was
accomplished through our "frontline empowerment" initiative, improvements to
our website to allow itinerary changes as well as a revamped quality and
incentive program to increase call centre productivity.
On a year-to-date basis, our guest services unit costs decreased slightly
by 0.01 cents or 4.0% for the same reasons as above.

LOSS ON IMPAIRMENT OF RESERVATION SYSTEM

During the second quarter of 2007, we continued our discussions with the
vendor of the aiRES reservations system regarding an amendment of the aiRES
contract. Following these discussions, we reached an agreement to discontinue
negotiations on an amendment to the aiRES contract. We concluded that
implementing a future version of aiRES in the timeframe needed to meet our
requirements was highly unlikely. As we could not assure the recovery of costs
previously capitalized in connection with the reservation system, we
recognized an impairment loss of $31.9 million.
Our current reservation system is being upgraded and is fully expected to
meet our strategic plan for the remainder of 2007 and throughout 2008. All of
the key functionalities we require to achieve our objectives are available to
us. We will review our options for a new reservation system from a variety of
companies.

FOREIGN EXCHANGE

The foreign exchange gains and losses that we realize are largely
attributable to the effect of the changes in the value of the Canadian dollar,
relative to the US dollar, on our US-denominated net monetary assets over the
respective periods. These assets, totalling approximately US $90 million at
September 30, 2007 (December 31, 2006 - $62 million), consist of US-dollar
cash and cash equivalents and security deposits on various leased and financed
aircraft. We hold US-denominated cash and short-term investments to reduce the
foreign currency risk inherent in our US-dollar expenditures. We reported an
unrealized foreign exchange loss of $4.1 million and $11.4 million during the
three and nine months ended September 30, 2007, respectively, on the
revaluation of our US-dollar monetary assets. This compares to a gain of
$0.2 million and a loss of $2.8 million during the same periods in the prior
year.
Operationally, we benefit from the strengthening Canadian dollar on our
expenditures which are either denominated in US-dollars or linked to U.S.
indices. These expenditures represent approximately one-third of our total
spend, primarily in fuel, aircraft leasing and certain maintenance costs.
For 2007, we estimate that every one-cent change in the value of the
Canadian dollar versus the US dollar will have an approximate CAD $6 million
impact on our annual costs (approximately $4 million for fuel and $2 million
for remaining costs). On October 16, 2007, we entered into forward foreign
exchange contracts on our US-dollar aircraft lease payments to mitigate the
exposure to fluctuations in the Canadian/US-dollar exchange rate.

INCOME TAX EXPENSE

The effective tax rates for the three and nine months ended September 30,
2007 were 32.3% and 33.3%, respectively, compared to 34.0% and 28.0% for the
same periods in 2006. The variance from 2006 reflects the effect of federal
and provincial corporate tax rate reductions enacted in June 2007
($2.3 million) and June 2006 ($11.2 million).
The federal government recently announced reductions in the federal
corporate income tax rate which would gradually reduce the rate to 15% by
2012. We estimate that if the rate reductions were to be enacted in 2007, our
2007 future income tax expense would be reduced by approximately $20 million.

FINANCIAL POSITION

At September 30, 2007, our total cash and cash equivalents were $634.2
million compared to $377.5 million at December 31, 2006. Part of this cash
balance relates to cash collected with respect to advance tickets sales, for
which the balance at September 30, 2007 was $210.6 million. Our financial
position remained strong as we were able to achieve an increase in our working
capital ratio from 1.0 at December 31, 2006 to 1.2 at September 30, 2007.
Our debt-to-equity ratio at September 30, 2007 was 2.1 to 1, including
$405.8 million which represents the present value of our operating lease
obligations. This compares favourably to our debt-to-equity ratio at December
31, 2006 of 2.3 to 1. Our debt-to-equity ratio was impacted negatively by an
adjustment to our opening retained earnings during the period as a result of
the adoption of the new CICA Handbook sections for Financial Instruments.
Effective January 1, 2007, we adjusted our opening retained earnings balance
by $36.6 million (net of future tax of $16.3 million) related to transaction
costs on long-term debt we previously included in Other Assets. Without this
adjustment, our debt-to-equity ratio at September 30, 2007 would have been 2.0
to 1.

Operating cash flow

Cash from operations in the third quarter increased 78.1% to $156.0
million from $87.6 million for the same period in 2006. For the nine months
ended September 30, 2007, cash from operations increased by 58.6% from $283.5
million to $449.5 million in the same period in 2006, due to growth in
earnings from operations.

Financing cash flow

In the third quarter of 2007, our total cash flow from financing
activities was $65.6 million, consisting mainly of $109.1 million in long-term
debt related to the financing of three new purchased aircraft offset by
$37.1 million in long-term debt repayments. In the third quarter of 2006, cash
flow from financing activities totalled $117.1 million and was made up
primarily of long-term debt issuances of $164.6 million for five aircraft, net
of $36.8 million in long-term debt repayments.
In the first nine months of 2007, our financing cash outflow totalled
$36.9 million and consisted mainly of $117.2 million in long-term debt
repayments, $13.3 million in repurchased shares and $12.7 million in deposits
on future leased aircraft offset by $109.1 million in long-term debt
issuances. In the comparable period in 2006, cash flow from financing
activities was $263.5 million, which was made up of an increase of $380.8
million in long-term debt to finance 11 aircraft offset by $96.0 million in
long-term debt repayments, $13.6 million in transaction costs related to 12
aircraft and $5.6 million in deposits on future leased aircraft.

Investing cash flow

Cash used in investing activities for the third quarter and first nine
months of 2007 totalled $131.6 million and $150.7 million, respectively,
compared to $184.3 million and $426.1 million in the previous year's
comparable periods. In the current year, our investing activities were
primarily related to the addition of three new aircraft as well as
$26.8 million in Boeing deposits on 23 future owned aircraft deliveries
partially offset by $13.7 million received in the first quarter related to the
sale of two engines. In 2006, cash used in investing activities was primarily
related to 11 new aircraft acquisitions.
We are currently in the process of converting our Preliminary Commitment
for US $140.4 million with Ex-Im Bank to a Final Commitment to purchase a
total of four more aircraft. The delivery dates for these aircraft are one in
November 2007, two in January 2008 and one in July 2008.

ACCOUNTING POLICIES

On January 1, 2007, we adopted the new Canadian accounting standards for
financial instruments: S.3861 "Financial Instruments - Disclosure and
Presentation," S. 3855 "Financial Instruments - Recognition and Measurement,"
S.3865 "Hedges" and S.1530 "Comprehensive Income." Prior periods have not been
restated. Under adoption of these new standards, we designated our cash and
cash equivalents, including US-dollar deposits, as held-for-trading, which is
measured at fair value. Accounts receivable are classified as loans and
receivables, which are measured at amortized cost. Accounts payable and
accrued liabilities and long-term debt are classified as other financial
liabilities, which are measured at amortized cost.
Effective January 1, 2007, and as provided for on transition, we selected
a policy of immediately expensing transaction costs incurred related to the
acquisition of financial assets and liabilities. Previously, transaction costs
had been deferred and included on the balance sheet as other assets or
liabilities and amortized over the term of the related asset or liability.
Under the transitional provisions, we retrospectively adopted this change in
accounting policy without the restatement of prior period financial statements
and incurred a charge to retained earnings of $36.6 million (net of future tax
of $16.3 million) related to legal and financing fees on long-term debt.
Effective January 1, 2007, we transferred $13.4 million of unamortized
hedging losses related to certain leased aircraft to accumulated other
comprehensive income. We will continue to amortize the hedging losses to net
earnings over the remaining term of the previously related hedged item.

Future accounting policy changes

In December 2006, the CICA issued three new accounting standards which
will be effective on January 1, 2008: S.1535 "Capital Disclosures," S.3862
"Financial Instruments - Disclosures" and S.3863 "Financial Instruments -
Presentation."
S.1535 establishes guidelines for the disclosure of information on an
entity's capital and how it is managed. This enhanced disclosure enables users
to evaluate the entity's objectives, policies and processes for managing
capital.
S.3862 and S.3863 replace the existing standard S.3861 "Financial
Instruments - Disclosure and Presentation." S.3862 requires enhanced
disclosure on the nature and extent of financial instrument risks and how an
entity manages those risks. S.3863 carries forward current presentation
requirements and provides additional guidance for the classification of
financial instruments.
These new requirements are for disclosure purposes only and will not
impact WestJet's financial results.

SHARE CAPITAL

As at November 2, 2007, we had 129,716,696 shares outstanding -
125,686,597 common voting shares and 4,030,099 variable voting shares and
13,240,404 stock options outstanding.

RESTRICTED SHARE UNIT PLAN

In the first half of 2007, WestJet introduced a restricted share unit
(RSU) plan, whereby up to a maximum of 2,000,000 RSUs may be issued to our
executive officers. Each RSU entitles a participant to receive cash equal to
the market value of the equivalent number of our common shares. Each RSU will
vest on a fixed vesting date no later than three years from the date of grant
and is to be paid out based on the market value for the five trading days
prior to the vesting date. Payments under the RSU plan are made in cash. No
WestJet shares will be issued in connection with the RSU plan. In the three
and nine months of 2007, we granted 1,587 and 64,186 RSUs, respectively, and
incurred compensation expense of $111,000 and $490,000, which is included in
general and administration expenses and accrued liabilities.

CONTROLS AND PROCEDURES

Management is responsible for the establishment and maintenance of a
system of disclosure controls and procedures. The Chief Executive Officer and
the Chief Financial Officer have evaluated the effectiveness of our disclosure
controls and procedures as of September 30, 2007, as defined under the rules
of the Canadian Securities Administrators, and have concluded that our
disclosure controls and procedures are effective. Management is also
responsible for the establishment and maintenance of a system of internal
controls over financial reporting. Management has designed internal controls
over financial reporting effectively to provide reasonable assurance regarding
the reliability of our financial reporting and the preparation of financial
statements in accordance with Canadian GAAP. There were no changes in our
internal controls over financial reporting during the most recent interim
period that have materially affected, or are reasonably likely to materially
affect, our internal controls over financial reporting.

OUTLOOK

Looking forward to the fourth quarter and full year 2007, the focus will
remain on continued revenue growth and cost containment.
We expect increased revenue and RASM growth, with the strong financial
and operational trends of the third quarter continuing through to the end of
the year. We will be receiving two more aircraft by the end of the 2007 (one
leased, one owned), bringing our total fleet to 70 aircraft, which translates
into a 14% increase in capacity for the fourth quarter versus the fourth
quarter of 2006. Our expectation for full-year capacity is in the range of a
15.5% to 16.0% growth when compared to 2006. In the fourth quarter, we will
begin service to our new scheduled international sun destinations including
Montego Bay (Jamaica), Puerto Plata and Punta Cana (Dominican Republic),
Mazatlan and Cabo San Lucas (Mexico) and St. Lucia. These new destinations,
along with our existing sun and transborder destinations and a Canadian dollar
that is now above par with the US dollar, will contribute to our fourth
quarter revenues exceeding levels from a year ago.
The overall current fuel pricing environment is unfavourable when
compared to the prior year. Higher crude oil prices and refinery costs are
being partially offset by the strengthening Canadian dollar versus the US
dollar. Based on market prices for jet fuel and the Canadian dollar at the end
of October 2007, our estimated fourth quarter fuel cost per litre would be
approximately 74 cents which would result in our fuel costs being 14% to 15%
higher than the fourth quarter of 2006 on a CASM basis.

<<
WestJet Airlines Ltd.
Consolidated Financial Statements
September 30, 2007
(Unaudited)

WestJet Airlines Ltd.
Consolidated Balance Sheet
(Stated in Thousands of Dollars)
(Unaudited)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
September 30 December 31 September 30
2007 2006 2006
-------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents
(note 2) $ 634,229 $ 377,517 $ 378,944
Accounts receivable 13,043 12,645 10,931
Income taxes recoverable - 13,820 14,162
Assets held for sale (note 3) - 13,157 -
Prepaid expenses and deposits 29,797 30,727 34,931
Inventory 11,727 8,200 5,161
-------------------------------------------------------------------------
688,796 456,066 444,129

Property and equipment (note 3) 2,196,852 2,158,746 2,149,757

Other assets (note 1) 49,693 111,715 103,719
-------------------------------------------------------------------------
$ 2,935,341 $ 2,726,527 $ 2,697,605
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued
liabilities $ 164,059 $ 121,157 $ 129,601
Advance ticket sales 210,613 148,743 165,498
Non-refundable guest credits 44,728 40,508 34,465
Current portion of long-term debt
(note 4) 170,901 153,720 146,334
Current portion of obligations
under capital lease (note 5(b)) 370 356 351
-------------------------------------------------------------------------
590,671 464,484 476,249

Long-term debt (note 4) 1,265,926 1,291,136 1,297,265

Obligations under capital lease
(note 5(b)) 1,203 1,483 1,573

Other liabilities 11,379 14,114 14,331

Future income tax (note 8) 188,399 149,283 134,519
-------------------------------------------------------------------------
2,057,578 1,920,500 1,923,937
-------------------------------------------------------------------------

Shareholders' equity:
Share capital (note 6(a)) 440,242 431,248 429,711
Contributed surplus 63,356 58,656 54,485
Accumulated other comprehensive
loss (12,370) - -
Retained earnings 386,535 316,123 289,472
-------------------------------------------------------------------------
877,763 806,027 773,668
-------------------------------------------------------------------------
Commitments and contingencies
(note 5)
-------------------------------------------------------------------------
$ 2,935,341 $ 2,726,527 $ 2,697,605
-------------------------------------------------------------------------
-------------------------------------------------------------------------

The accompanying notes are an integral part of the interim consolidated
financial statements.

WestJet Airlines Ltd.
Consolidated Statement of Shareholders' Equity
(Stated in Thousands of Dollars)
(Unaudited)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
For the nine Accumulated
months ended other
September 30, Share Contributed comprehensive Retained
2007 capital surplus loss earnings Total
-------------------------------------------------------------------------

Balance at
January 1,
2007 $ 431,248 $ 58,656 $ - $ 316,123 $ 806,027
Change in
accounting
policies (note 1) - - (13,420) (36,612) (50,032)
-------------------------------------------------------------------------
Balance at
January 1, 2007,
restated 431,248 58,656 (13,420) 279,511 755,995
Comprehensive
income:
Net earnings - - - 117,474 117,474
Amortization of
hedge settlements - - 1,050 - 1,050
-------------------------------------------------------------------------
Total
comprehensive
income - - 1,050 117,474 118,524
Issuance of shares
pursuant to stock
option plans
(note 6(a)) 1,467 - - - 1,467
Stock-based
compensation
expense
(note 6(d)) - 15,069 - - 15,069
Stock-based
compensation on
stock options
exercised
(note 6(a)) 10,369 (10,369) - - -
Shares repurchased
(note 6(a)) (2,842) - - (10,450) (13,292)
-------------------------------------------------------------------------
Balance at
September 30,
2007 $ 440,242 $ 63,356 $ (12,370) $ 386,535 $ 877,763
-------------------------------------------------------------------------
-------------------------------------------------------------------------

For the nine
months ended
September 30, 2006
-------------------------------------------------------------------------
Balance at
December 31,
2005 $ 429,613 $ 39,093 $ - $ 201,447 $ 670,153
Net earnings - - - 88,025 88,025
Stock-based
compensation
expense
(note 6(d)) - 15,497 - - 15,497
Stock-based
compensation on
stock options
exercised
(note 6(a)) 105 (105) - - -
Share issuance
costs (note 6(a)) (10) - - - (10)
Tax benefit of
issue costs
(note 6(a)) 3 - - - 3
-------------------------------------------------------------------------
Balance at
September 30,
2006 $ 429,711 $ 54,485 $ - $ 289,472 $ 773,668
-------------------------------------------------------------------------
-------------------------------------------------------------------------

The accompanying notes are an integral part of the interim consolidated
financial statements.

WestJet Airlines Ltd.
Consolidated Statement of Earnings
(Stated in Thousands of Dollars, Except Per Share Amounts)
(Unaudited)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30 September 30
2007 2006 2007 2006
-------------------------------------------------------------------------
Revenues:
Guest revenues $ 556,736 $ 453,342 $ 1,396,780 $ 1,146,228
Charter and other 50,667 44,978 184,942 157,203
Interest income 6,675 3,942 16,358 9,536
-------------------------------------------------------------------------
614,078 502,262 1,598,080 1,312,967

Expenses:
Aircraft fuel 131,090 119,154 361,572 319,199
Airport operations 73,176 61,465 220,422 183,173
Flight operations and
navigational charges 66,529 62,254 193,497 167,523
Sales and marketing 50,869 43,595 135,064 119,532
Depreciation and
amortization 32,354 29,495 94,385 81,327
General and
administration 29,387 18,628 77,354 60,368
Inflight 21,715 17,834 62,011 48,610
Interest 19,105 18,446 56,295 50,899
Aircraft leasing 18,739 17,682 57,049 53,785
Maintenance 18,606 15,648 56,164 50,631
Guest services 8,290 8,269 25,554 23,252
Loss on impairment of
assets (note 3) - - 31,881 -
-------------------------------------------------------------------------
469,860 412,470 1,371,248 1,158,299
-------------------------------------------------------------------------

Earnings from operations 144,218 89,792 226,832 154,668

Non-operating income
(expense):
Gain (loss) on foreign
exchange (4,137) 201 (11,371) (2,751)
Gain (loss) on disposal
of property and
equipment (44) (9) 453 792
Non-recurring expenses
(note 5(c)) - - - (15,600)
-------------------------------------------------------------------------
(4,181) 192 (10,918) (17,559)

Employee profit share
(note 7) (27,749) (9,960) (39,723) (14,929)
-------------------------------------------------------------------------
Earnings before income
taxes 112,288 80,024 176,191 122,180

Income tax expense
(note 8):
Current (976) (740) (3,279) (2,284)
Future (35,242) (26,474) (55,438) (31,871)
-------------------------------------------------------------------------
(36,218) (27,214) (58,717) (34,155)
-------------------------------------------------------------------------
Net earnings $ 76,070 $ 52,810 $ 117,474 $ 88,025
-------------------------------------------------------------------------
-------------------------------------------------------------------------

-------------------------------------------------------------------------
Earnings per share
(note 6(c)):
Basic $ 0.59 $ 0.41 $ 0.91 $ 0.68
Diluted $ 0.58 $ 0.41 $ 0.90 $ 0.68
-------------------------------------------------------------------------
-------------------------------------------------------------------------

The accompanying notes are an integral part of the interim consolidated
financial statements.

WestJet Airlines Ltd.
Consolidated Statement of Cash Flows
(Stated in Thousands)
(Unaudited)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30 September 30
2007 2006 2007 2006
-------------------------------------------------------------------------
Cash flows from (used in):

Operating activities:
Net earnings $ 76,070 $ 52,810 $ 117,474 $ 88,025
Items not involving
cash:
Depreciation and
amortization 32,354 29,495 94,385 81,327
Amortization of
other liabilities (228) (217) (662) (651)
Amortization of hedge
settlements 350 348 1,050 1,043
Loss on disposal
of property,
equipment and
aircraft parts
(note 3) 619 9 32,200 350
Stock-based
compensation
expense (note 6(d)) 4,379 5,397 15,559 15,497
Future income tax
expense 35,242 26,474 55,438 31,871
Unrealized foreign
exchange loss (gain) 4,449 (241) 12,513 2,922
Change in non-cash
working capital 2,747 (26,501) 121,559 63,070
-------------------------------------------------------------------------
155,982 87,574 449,516 283,454
-------------------------------------------------------------------------

Financing activities:
Repayment of long-term
debt (37,063) (36,758) (117,167) (96,005)
Increase in long-term
debt 109,138 164,573 109,138 380,770
Decrease in
obligations under
capital lease (90) (85) (266) (395)
Share issuance costs
(note 6(a)) - - - (10)
Shares repurchased (1,486) - (13,292) -
Increase in other
assets (4,531) (10,634) (13,795) (19,819)
Issuance of common
shares (note 6(a)) - - 1,467 -
Increase in non-cash
working capital (373) - (3,000) (1,071)
-------------------------------------------------------------------------
65,595 117,096 (36,915) 263,470
-------------------------------------------------------------------------

Investing activities:
Aircraft additions (124,159) (176,502) (146,345) (395,117)
Aircraft disposals 12 6 12 3,766
Other property and
equipment additions (7,417) (7,926) (18,189) (36,287)
Other property and
equipment disposals 8 74 13,801 1,546
-------------------------------------------------------------------------
(131,556) (184,348) (150,721) (426,092)
-------------------------------------------------------------------------
Cash flow from
operating, financing
and investing
activities 90,021 20,322 261,880 120,832
Effect of exchange rate
on cash and cash
equivalents (1,768) 157 (5,168) (1,528)
-------------------------------------------------------------------------
Net change in cash and
cash equivalents 88,253 20,479 256,712 119,304

Cash and cash
equivalents, beginning
of period 545,976 358,465 377,517 259,640

-------------------------------------------------------------------------
Cash and cash
equivalents, end of
period $ 634,229 $ 378,944 $ 634,229 $ 378,944
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Interest paid $ (18,387) $ (17,240) $ (56,185) $ (47,731)
Taxes received (paid) $ 341 $ (489) $ 11,430 $ (2,537)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

The accompanying notes are an integral part of the interim consolidated
financial statements.

WestJet Airlines Ltd.
Notes to Consolidated Financial Statements
For the three and nine month periods ended September 30, 2007 and 2006
(Tabular Dollar Amounts Are Stated in Thousands, Except Share and Per
Share Data)
(Unaudited)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

1. Significant Accounting Policies:

The interim consolidated financial statements of WestJet Airlines Ltd.
("WestJet" or "the Corporation") have been prepared by management in
accordance with Canadian generally accepted accounting principles (GAAP).
The interim consolidated financial statements have been prepared
following the same accounting policies and methods of computation as the
consolidated financial statements for the fiscal year ended December 31,
2006, except as described below. The disclosures provided below are
incremental to those included with the annual consolidated financial
statements. The interim consolidated financial statements should be read
in conjunction with the consolidated financial statements and the notes
thereto in the Corporation's annual report for the year ended
December 31, 2006.

The Corporation's business is seasonal in nature with varying levels of
activity throughout the year. The Corporation experiences increased
domestic travel in the summer months and more demand for transborder and
charter sun destinations over the winter period.

Change in accounting policies:

On January 1, 2007, the Corporation adopted the following new Canadian
accounting standards: S.3855 "Financial Instruments - Recognition and
Measurement," S.3865 "Hedging" and S.1530 "Comprehensive Income." Prior
periods have not been restated.

Comprehensive income consists of changes in gains and losses on hedge
settlements. Other comprehensive income refers to items recognized in
comprehensive income that are excluded from net earnings.

The new standard on Financial Instruments prescribes when a financial
asset, financial liability or non-financial derivative is to be
recognized on the balance sheet and at what amount, requiring fair value
or cost-based measures under different circumstances. Financial
instruments must be classified into one of these five categories:
held-for-trading, held-to-maturity, loans and receivables,
available-for-sale financial assets or other financial liabilities. All
financial instruments, including derivatives, are measured on the balance
sheet at fair value except for loans and receivables, held-to-maturity
investments and other financial liabilities, which are measured at
amortized cost. Subsequent measurement and changes in fair value will
depend on initial classification, as follows: held-for-trading financial
assets are measured at fair value and changes in fair value are
recognized in net earnings; available-for-sale financial instruments are
measured at fair value with changes in fair value recorded in other
comprehensive income until the investment is derecognized or impaired, at
which time the amounts would be recorded in net earnings.

Under adoption of these new standards, the Corporation designated its
cash and cash equivalents, including US-dollar deposits, as held-for-
trading, which is measured at fair value. Accounts receivable are
classified as loans and receivables, which are measured at amortized
cost. Accounts payable and accrued liabilities and long-term debt are
classified as other financial liabilities, which are measured at
amortized cost.

Effective January 1, 2007, and as provided for on transition, the
Corporation has selected a policy of immediately expensing transaction
costs incurred related to the acquisition of financial assets and
liabilities. Previously, transaction costs had been deferred and included
on the balance sheet as other assets or liabilities, and amortized over
the term of the related asset or liability. Under the transitional
provisions, the Corporation retrospectively adopted this change in
accounting policy without the restatement of prior period financial
statements and incurred a charge to retained earnings of $36.6 million
(net of future tax of $16.3 million) related to legal and financing fees
on long-term debt.

All derivative instruments, including embedded derivatives, are recorded
on the balance sheet and in the statement of earnings at fair value
unless exempted from derivative treatment as a normal purchase and sale.
All changes in their fair value are recorded in earnings. If cash flow
hedge accounting is used, the fair value of derivative instruments is
included in accumulated other comprehensive income with any
ineffectiveness recorded in earnings. Any changes in the fair value to
the extent effective are recorded through other comprehensive income. As
of September 30, 2007, the Corporation did not have any outstanding
derivative instruments. During October 2007, the Corporation entered into
foreign exchange contracts to hedge US-dollar aircraft lease payments.
The forward contracts were designated as cash flow hedges and qualify for
hedge accounting.

Effective January 1, 2007, the Corporation transferred $13.4 million of
unamortized hedging losses related to certain Boeing Next-Generation
leased aircraft to accumulated other comprehensive income. The
Corporation will continue to amortize the hedging losses to net earnings
over the remaining term of the previously related hedged item.

Future accounting policies:

In December 2006, the Canadian Institute of Chartered Accountants (CICA)
issued three new accounting standards which the Corporation will adopt
effective January 1, 2008: S.1535 "Capital Disclosures," S.3862
"Financial Instruments - Disclosures" and S.3863 "Financial Instruments -
Presentation."

S.1535 establishes guidelines for the disclosure of information on an
entity's capital and how it is managed. This enhanced disclosure enables
users to evaluate the entity's objectives, policies and processes for
managing capital.

S.3862 and S.3863 replace the existing S.3861 "Financial Instruments -
Disclosure and Presentation." S.3862 requires enhanced disclosure on the
nature and extent of financial instrument risks and how an entity manages
those risks. S.3863 carries forward the existing presentation
requirements and provides additional guidance for the classification of
financial instruments.

These new requirements are for disclosure purposes only and will not
impact the financial results of the Corporation.

2. Cash and cash equivalents:

At September 30, 2007, the Corporation had US-dollar cash and cash
equivalents totalling US $43,988,000 (December 31, 2006 - US $32,019,000;
September 30, 2006 - US $34,838,000).

As at September 30, 2007, cash and cash equivalents included restricted
cash for letters of credit of US $172,000 (December 31, 2006 -
US $5,279,000; September 30, 2006 - US $5,033,000) and CAD $1,846,000
(December 31, 2006 - CAD $1,858,000; September 30, 2006 - CAD $NIL). Also
in cash and cash equivalents at September 30, 2007 was US $231,000
(December 31, 2006 - US $186,000; September 30, 2006 - US $157,000) not
yet remitted for passenger facility charges.

3. Property and equipment:

------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated Net book
September 30, 2007 Cost depreciation value
-------------------------------------------------------------------------
Aircraft $ 2,221,000 $ 261,974 $ 1,959,026
Ground property and equipment 157,948 77,634 80,314
Spare engines and parts 76,403 12,728 63,675
Buildings 40,028 5,559 34,469
Leasehold improvements 7,155 4,978 2,177
Assets under capital lease 2,481 1,067 1,414
-------------------------------------------------------------------------
2,505,015 363,940 2,141,075
Deposits on aircraft 48,083 - 48,083
Assets under development 7,694 - 7,694
-------------------------------------------------------------------------
$ 2,560,792 $ 363,940 $ 2,196,852
-------------------------------------------------------------------------
-------------------------------------------------------------------------

-------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated Net book
December 31, 2006 Cost depreciation value
-------------------------------------------------------------------------
Aircraft $ 2,086,301 $ 185,526 $ 1,900,775
Ground property and equipment 153,896 65,854 88,042
Spare engines and parts 70,459 10,145 60,314
Buildings 40,028 4,825 35,203
Leasehold improvements 6,914 4,579 2,335
Assets under capital lease 2,481 694 1,787
-------------------------------------------------------------------------
2,360,079 271,623 2,088,456
Deposits on aircraft 38,011 - 38,011
Assets under development 32,279 - 32,279
-------------------------------------------------------------------------
$ 2,430,369 $ 271,623 $ 2,158,746
-------------------------------------------------------------------------
-------------------------------------------------------------------------

-------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated Net book
September 30, 2006 Cost depreciation value
-------------------------------------------------------------------------
Aircraft $ 2,040,824 $ 163,069 $ 1,877,755
Ground property and equipment 152,621 61,335 91,286
Spare engines and parts 85,596 11,943 73,653
Buildings 39,501 4,564 34,937
Leasehold improvements 6,769 4,430 2,339
Assets under capital lease 2,481 569 1,912
-------------------------------------------------------------------------
2,327,792 245,910 2,081,882
Deposits on aircraft 39,971 - 39,971
Assets under development 27,904 - 27,904
-------------------------------------------------------------------------
$ 2,395,667 $ 245,910 $ 2,149,757
-------------------------------------------------------------------------
-------------------------------------------------------------------------

In 2006, the Corporation entered into agreements to sell certain spare
engines and aircraft parts to an unrelated third party. At December 31,
2006, these engines and parts had been taken out of revenue-generating
service and were included at their net book value in current assets, as
assets held for sale. These transactions were completed in the first
quarter of 2007.

During the second quarter of 2007, the Corporation continued its
discussions with the vendor of the aiRES reservations system regarding an
amendment to the aiRES contract. Following these discussions, the
Corporation and the vendor agreed to discontinue such negotiations and
the Corporation concluded that it was highly unlikely that implementation
would occur in the near term. As the Corporation could not assure the
recovery of costs previously capitalized in connection with the
reservations system, it recognized an impairment loss of $31,881,000.

During the three and nine months ended September 30, 2007, the
Corporation expensed $127,000 and $324,000 respectively (three months
ended September 30, 2006 - $124,000; nine months ended September 30, 2006
- $1,142,000), of aircraft parts deemed to be beyond economic repair,
which were included in maintenance expense.

4. Long-term debt:

-------------------------------------------------------------------------
-------------------------------------------------------------------------
September 30 December 31 September 30
2007 2006 2006
-------------------------------------------------------------------------
$1,818,605,000 in 48 individual
term loans, amortized on a
straight-line basis over a 12-year
term, repayable in quarterly
principal instalments ranging from
$674,000 to $955,000, including
fixed interest at a weighted
average rate of 5.34%, maturing
between 2014 and 2019. These
facilities are guaranteed by the
Ex-Im Bank and secured by one
800-series aircraft, 34 700-series
aircraft and 13 600-series
aircraft. $ 1,395,735 $ 1,393,439 $ 1,390,455

$35,000,000 in three individual
term loans, repayable in monthly
instalments ranging from $105,000
to $169,000, including floating
interest at the bank's prime rate
plus 0.88%, with an effective
interest rate of 7.13% as at
September 30, 2007, maturing in
2008 and 2011, secured by three
Next-Generation flight simulators. 24,068 26,223 26,911

$10,341,000 in 15 individual term
loans, amortized on a straight-line
basis over a five-year term,
repayable in quarterly principal
instalments ranging from $29,000 to
$47,000, including floating
interest at the Canadian LIBOR rate
plus 0.08%, with a weighted average
effective interest rate of 4.96% as
at September 30, 2007, maturing
between 2007 and 2011, guaranteed
by the Ex-Im Bank and secured by
certain 700-series and 600-series
aircraft. 4,134 11,699 12,547

$12,000,000 term loan repayable in
monthly instalments of $108,000,
including interest at 9.03%,
maturing April 2011, secured by the
Calgary hangar facility. 10,148 10,426 10,512

$4,550,000 term loan repayable in
monthly instalments of $50,000,
including floating interest at the
bank's prime rate plus 0.50%, with
an effective interest rate of 6.75%
as at September 30, 2007, maturing
April 2013, secured by the Calgary
hangar facility. 2,742 3,069 3,174

-------------------------------------------------------------------------
1,436,827 1,444,856 1,443,599
Less current portion 170,901 153,720 146,334
-------------------------------------------------------------------------
$ 1,265,926 $ 1,291,136 $ 1,297,265
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Future scheduled repayments of long-term debt are as follows:

-------------------------------------------------------------------------
-------------------------------------------------------------------------
2007 $ 39,347
2008 170,315
2009 154,497
2010 153,829
2011 166,579
2012 and thereafter 752,260
-------------------------------------------------------------------------
$ 1,436,827
-------------------------------------------------------------------------
-------------------------------------------------------------------------

At September 30, 2007, the Corporation had a Preliminary Commitment from
Ex-Im Bank for four aircraft to be delivered between November 2007 and
July 2008 at a total value of US $140.4 million. Upon conversion of the
Preliminary Commitment to a Final Commitment, the Corporation will be
charged a commitment fee of 0.125% per annum on the unutilized and
uncancelled balance of the Ex-Im Bank facility, payable at specified
dates and upon delivery of each aircraft, and will be charged a 3%
exposure fee on the financed portion of the aircraft price, payable upon
delivery of an aircraft.

5. Commitments and contingencies:

a) Aircraft Purchases:

At September 30, 2007, the Corporation has committed to purchase 24
737-700 Next-Generation aircraft for delivery between 2007 and 2013.

The remaining estimated amounts to be paid in deposits and purchase
prices in US dollars relating to the purchases of the remaining aircraft
and live satellite television systems are as follows:

-------------------------------------------------------------------------
-------------------------------------------------------------------------
2007 $ 41,630
2008 102,141
2009 7,614
2010 36,645
2011 78,680
2012 and thereafter 739,841
-------------------------------------------------------------------------
$ 1,006,551
-------------------------------------------------------------------------
-------------------------------------------------------------------------

b) Leasehold Commitments:

The Corporation has entered into operating leases and agreements for
aircraft, buildings, computer hardware and software licences, satellite
programming, and capital leases relating to ground handling equipment.
The obligations are as follows:

-------------------------------------------------------------------------
-------------------------------------------------------------------------
Capital Operating
Leases Leases
-------------------------------------------------------------------------
2007 $ 111 $ 24,433
2008 444 108,173
2009 444 124,810
2010 698 152,126
2011 38 161,787
2012 and thereafter - 791,508
-------------------------------------------------------------------------
Total lease payments 1,735 $ 1,362,837
Less imputed interest at 5.29% (162) ------------
------------------------------------------------------------ ------------
Net minimum lease payments 1,573
Less current portion of obligations under capital
lease (370)
------------------------------------------------------------
Obligations under capital lease $ 1,203
------------------------------------------------------------
------------------------------------------------------------

At September 30, 2007, the Corporation has committed to lease 15 737-700
series aircraft and four 737-800 series Next-Generation aircraft to be
delivered between 2007 and 2011 for terms ranging between eight and
10 years in US dollars. These amounts have been included at their
Canadian dollar equivalent in the above table with the US-dollar
equivalent in the following table:

-------------------------------------------------------------------------
-------------------------------------------------------------------------
2007 $ 20,104
2008 92,800
2009 115,534
2010 144,221
2011 156,206
2012 and thereafter 752,954
-------------------------------------------------------------------------
$ 1,281,819
-------------------------------------------------------------------------
-------------------------------------------------------------------------

c) Contingencies:

On April 4, 2004, Air Canada commenced a lawsuit against WestJet. Air
Canada claimed damages in the amount of $220 million in an amendment to
its statement of claim. On May 29, 2006, as a full settlement, the
Corporation agreed to pay Air Canada's investigation and litigation costs
incurred of $5.6 million and accept Air Canada's request that WestJet
make a donation in the amount of $10 million in the name of Air Canada
and the Corporation to children's charities across the country. Air
Canada withdrew its claims in light of this settlement. All legal
proceedings between the parties have been terminated. These amounts and
other settlement costs have been included in non-recurring expenses.

A Statement of Claim was filed by Jetsgo Corporation (Jetsgo) in the
Ontario Superior Court on October 15, 2004, against WestJet, an officer,
and a former officer (the Defendants). Jetsgo was seeking damages in an
unspecified amount to be determined prior to trial plus $50 million for
spoliation, punitive and exemplary damages. On May 13, 2005, Jetsgo
sought bankruptcy protection. Based on an Order of the Ontario Supreme
Court of Justice dated April 25, 2007, this action has been formally
dismissed.

The Corporation is party to other legal proceedings and claims that arise
during the ordinary course of business. It is the opinion of management
that the ultimate outcome of these matters will not have a material
effect upon the Corporation's financial position, results of operations
or cash flows.

6. Share capital:

a) Issued and outstanding:

-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, 2007 September 30, 2007
-------------------------------------------------------------------------
Number Amount Number Amount
-------------------------------------------------------------------------
Common and variable
voting shares:

Balance, beginning of
period 129,650,259 $439,088 129,648,688 $431,248
Exercise of options
(cash and cashless) 29,097 - 776,368 1,467
Stock-based compensation
expense on stock
options exercised - 1,493 - 10,369
Shares repurchased (100,000) (339) (845,700) (2,842)
Share issuance costs - - - -
Tax benefit of issue
costs - - - -
-------------------------------------------------------------------------
Balance, end of period 129,579,356 $440,242 129,579,356 $440,242
-------------------------------------------------------------------------
-------------------------------------------------------------------------

------------------------------------------------
Twelve Months Ended
December 31, 2006
------------------------------------------------
Number Amount
------------------------------------------------
Common and variable
voting shares:

Balance, beginning of
period 129,575,099 $429,613

Exercise of options
(cash and cashless) 73,589 -
Stock-based compensation
expense on stock
options exercised - 1,642
Shares repurchased - -
Share issuance costs - (10)
Tax benefit of issue
costs - 3
------------------------------------------------
129,648,688 $431,248
------------------------------------------------
------------------------------------------------

-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, 2006 September 30, 2006
-------------------------------------------------------------------------
Number Amount Number Amount
-------------------------------------------------------------------------
Common and variable
voting shares:

Balance, beginning of
period 129,578,305 $ 429,711 129,575,099 $ 429,613
Exercise of options
(cash and cashless) - - 3,206 -
Stock-based
compensation expense
on stock options
exercised - - - 105
Share issuance costs - - - (10)
Tax benefit of issue
costs - - - 3
-------------------------------------------------------------------------
Balance, end of period 129,578,305 $ 429,711 129,578,305 $ 429,711
-------------------------------------------------------------------------
-------------------------------------------------------------------------

As at September 30, 2007, the number of common voting shares outstanding
was 125,357,776 (December 31, 2006 - 124,495,951; September 30, 2006 -
122,844,030) and the number of variable voting shares was 4,221,580
(December 31, 2006 - 5,152,737; September 30, 2006 - 6,734,275).

On February 26, 2007, WestJet filed a notice with the Toronto Stock
Exchange (the "TSX") to make a normal course issuer bid to purchase
outstanding shares on the open market. As approved by the TSX, WestJet is
authorized to purchase up to 2,000,000 shares (representing approximately
1.5% of its currently issued and outstanding shares) during the period
from February 28, 2007 to February 27, 2008, or until such earlier time
as the bid is completed or terminated at the option of WestJet. Any
shares WestJet purchases under this bid will be purchased on the open
market through the facilities of the TSX at the prevailing market price
at the time of the transaction. Shares acquired under the bid will be
cancelled. In the three and nine months ended September 30, 2007, the
Corporation purchased 100,000 and 845,700 shares, respectively, under the
bid for total consideration of $1,486,000 and $13,292,000. The $1,147,000
and $10,450,000 excess of the market price over the average book value
was charged to retained earnings.

b) Stock option plan:

Changes in the number of options, with their weighted average exercise
prices, are summarized below:

-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, 2007 September 30, 2007 December 31, 2006
-------------------------------------------------------------------------
Weighted Weighted Weighted
average average average
Number of exercise Number of exercise Number of exercise
options price options price options price
-------------------------------------------------------------------------
Stock options
outstanding,
beginning
of
period 14,231,868 $ 13.89 15,046,201 $ 13.21 11,428,718 $ 13.94
Issued 23,649 15.50 1,669,607 16.41 5,980,660 11.82
Exercised (269,523) 15.12 (2,573,719) 11.74 (433,129) 11.21
Forfeited (41,539) 13.48 (197,634) 13.10 (332,711) 13.19
Expired (6,259) 15.97 (6,259) 15.97 (1,597,337) 13.78
-------------------------------------------------------------------------
Stock options
outstanding,
end of
period 13,938,196 $ 13.86 13,938,196 $ 13.86 15,046,201 $ 13.21
-------------------------------------------------------------------------

Exercisable,
end of
period 6,099,334 $ 15.07 6,099,334 $ 15.07 4,846,236 $ 13.63
-------------------------------------------------------------------------
-------------------------------------------------------------------------

-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, 2006 September 30, 2006
-------------------------------------------------------------------------
Weighted Weighted
average average
Number of exercise Number of exercise
Options price Options price
-------------------------------------------------------------------------

Stock options outstanding,
beginning of period 15,627,058 $ 13.16 11,428,718 $ 13.94
Issued 26,266 9.90 5,906,245 11.81
Exercised - - (27,736) 11.21
Forfeited (228,077) 12.89 (309,833) 13.29
Expired (22,998) 12.16 (1,595,145) 13.78
-------------------------------------------------------------------------

Stock options outstanding,
end of period 15,402,249 $ 13.16 15,402,249 $ 13.16
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Exercisable, end of period 5,252,553 $ 13.44 5,252,553 $ 13.44
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Under the terms of the Corporation's stock option plan, a cashless
settlement alternative is available, whereby option holders can either
(a) elect to receive shares by delivering cash to the Corporation in the
amount of the options, or (b) elect to receive a number of shares
equivalent to the market value of the options over the exercise price.
For the three and nine months ended September 30, 2007, option holders
exercised 269,523 and 2,442,923 options, respectively (12 months ended
December 31, 2006 - 433,129 options; three months ended September 30,
2006 - NIL options; nine months ended September 30, 2006 - 27,736
options) on a cashless settlement basis and received 29,097 and 645,572
shares, respectively (12 months ended December 31, 2006 - 73,589 shares;
three months ended September 30, 2006 - NIL shares; nine months ended
September 30, 2006 - 3,206 shares).

c) Per share amounts:

The following table summarizes the shares used in calculating net
earnings per share:
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30 September 30
2007 2006 2007 2006
-------------------------------------------------------------------------

Weighted average
number of shares
outstanding - basic 129,610,501 129,578,305 129,754,229 129,577,962
Effect of dilutive
employee stock
options 1,334,989 - 1,094,785 184
-------------------------------------------------------------------------
Weighted average
number of shares
outstanding -
diluted 130,945,490 129,578,305 130,849,014 129,578,146
-------------------------------------------------------------------------
-------------------------------------------------------------------------

For the three and nine month periods ended September 30, 2007, 1,659,989
and 4,633,046 (three months ended September 30, 2006 - 15,402,249; nine
months ended September 30, 2006 - 12,774,317) options, respectively, were
not included in the calculation of dilutive potential shares as the
result would be anti-dilutive.

d) Stock-based compensation:

As new options are granted, the fair value of these options will be
expensed over the vesting period, with an offsetting entry to contributed
surplus. The fair value of each option grant is estimated on the date of
grant using the Black-Scholes option-pricing model. Upon the exercise of
stock options, consideration received, together with amounts previously
recorded in contributed surplus, is recorded as an increase in share
capital.

Stock-based compensation expense related to stock options included in
flight operations and general and administration expenses totalled
$4,268,000 and $15,069,000 for the three and nine months ended
September 30, 2007, respectively (three months ended September 30, 2006 -
$5,397,000; nine months ended September 30, 2006 - $15,497,000).

The fair market value of options granted during the three and nine months
ended September 30, 2007 and 2006 and the assumptions used in their
determination are as follows:

-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30 September 30
2007 2006 2007 2006
-------------------------------------------------------------------------
Weighted average fair
market value per option $ 5.36 $ 3.46 $ 5.65 $ 4.29
Average risk-free interest
rate 4.65% 3.98% 4.20% 4.24%
Average volatility 38% 42% 38% 42%
Expected life (years) 3.6 3.6 3.7 3.6
-------------------------------------------------------------------------
-------------------------------------------------------------------------

The Corporation has a restricted share unit (RSU) plan, whereby up to a
maximum of 2,000,000 RSUs may be issued to executive officers of the
Corporation. Each RSU entitles a participant to receive cash equal to the
market value of the equivalent number of shares of the Corporation. The
Corporation determines compensation expense for the RSUs based on the
intrinsic value, considered to be the market value, at each reporting
period which is recognized in earnings over the vesting period. During
the three and nine months ended September 30, 2007, 1,587 and 64,186
RSUs, respectively, were granted with $111,000 and $490,000 of
compensation expense included in general and administration expenses and
accrued liabilities. RSUs granted in 2007 will vest in January 2010.

7. Employee profit share:

The provision for employee profit share is estimated based on adjusted
actual year-to-date earnings results. The actual employee profit share
amount is to be determined by the Board of Directors based on audited
financial results at the completion of the financial year.

8. Income taxes:

During the second quarter of 2007, the federal government substantively
enacted a reduction of the general corporate tax rate by one-half per
cent to 18.5%, effective January 1, 2011. The impact of this legislation
is a reduction of the Corporation's liability and provision for future
income taxes of $2.3 million in the nine months ended September 30, 2007.

9. Comparative figures:

Certain prior period balances have been reclassified to conform to
current period's presentation.

10. Subsequent events:

On October 26, 2007, the Corporation exercised options to lease an
additional three 737-700 Next-Generation aircraft to be delivered in 2011
for terms ranging between eight and 10 years for a total commitment of
US $132.6 million.

On November 6, 2007, the Corporation signed a Letter of Intent for two
additional 737-800 Next-Generation aircraft to be delivered in November
2008 and January 2009 for an estimated total commitment of
US $80.0 million.

WestJet will hold a live analysts' conference call today at 9 a.m. MT
(11 a.m. ET). Sean Durfy, President and CEO and Vito Culmone, Executive
Vice-President, Finance and CFO will discuss WestJet's third quarter 2007
results and answer questions from financial analysts. The conference call
is available through the toll-free telephone number 1-888-564-1610.
Participants are encouraged to join the call 10 minutes prior to the
scheduled start, at 8:50 a.m. MT (10:50 ET). The call can also be heard
live through an Internet webcast in the Investor Relations section of
westjet.com.
>>